Orthodox theory is obviously wrong, because since the Fed was founded, the US dollar has lost over 95% of its value, we have had the worst depressions in the history of the world, and unemployment in the US is now over 25%. Get it?

On the other hand, libertarian theory says that interest originates in the *subjective time preferences* of all people using money. There is no way that government can know what these are. Its attempts to manage the money supply can only produce planned chaos which is what it does produce. If you force the price of something to be different than the market price, you get surpluses and shortages in all the wrong places – with money, booms and busts. Get it?

So either way you look at it, the GFC is not stand-alone evidence of the irrationality of markets, but proof that government’s manipulation of the money supply produces social, economic and moral evils that are predictable and avoidable.

4.
But there’s a fourth, more profound problem.

There’s no use asking “What else can we do…?” if you permit yourself illogical methods of inquiry. Your intellectual method is to assume what is in issue, to chase your tail around and around in circles. Woolly thinking is not a virtue. You must free yourself from this intellectual vice. Not even you believe the faith you have in government!

Unlike you, I have not just *assumed* what I have proved.

At least Divergence is vaguely aware, and has weakly tried – once - to prove the downside of a free society – but ultimately demonstrated only an ignorance of what he is talking about.

But thinker2 doesn’t even seem to be aware of the intellectual hole he is in. You have *not* shown that the problems of big business are because of big business rather than government.

No-one has yet given any sound reason in favour of democracy rather than freedom from government's meddling in any given area.

www.mises.org

Peter Hume,

Market failure: I was thinking of basic scientific research, but other examples are given in the Wikipedia article by that name.

You seem to think that monopoly of resources will not occur because the elite are nice, public-spirited people (and some are) or because they recognize that even the rich will be better off in the long run in a more equal society. That they would be better off is the position of Wilkinson and Pickett, the authors of “The Spirit Level”, and I am inclined to agree.

http://www.equalitytrust.org.uk/

However, if people were always willing to forego an immediate reward for some long-term gain, there would be no problems with obesity, alcohol abuse, problem gambling, etc. It is easy to find examples of countries where a tiny elite wallows in immense wealth, while the bulk of the people are extremely poor. Look up Equatorial Guinea. There is also a “tragedy of the commons” problem. If you are a landscaper in California and your competitors can get away with hiring illegal immigrants, paying them a pittance, and ignoring health and safety risks, then they can underbid you, so you must do the same or go out of business.

(cont'd)

The elite can exert their power either through controlling the government or indirectly, by controlling resources. I don’t see much difference between a serf being afraid to run away because he knows that he is very likely to be dragged back and flogged or being afraid to run away because he knows that he is very likely to starve.

In our own society inequality is rising again. This graph shows the share of national income accruing to the top 1% since 1900.

http://clubtroppo.com.au/2006/08/24/policy-and-perhaps-culture-matter-for-income-distribution/

The greater equality in the middle of the 20th century probably occurred for the same reasons that the rulers of Jordan, Syria, and the Gulf states are now making concessions. Basically, the elite in a number of countries allowed globalisation to be shut down for fear of something worse (although they have regained their confidence with the collapse of Communism). They were badly frightened by what was happening in Russia. In the US, World War I meant decent jobs for blacks for the first time, and after the war there were bloody riots between the blacks and the immigrants who were displacing them from their jobs,

http://en.wikipedia.org/wiki/East_St._Louis,_Illinois

as well as often violent labour unrest

http://en.wikipedia.org/wiki/Timeline_of_labor_issues_and_events

Immigrants were occasionally violent anarchists or communists, and happy to spread their ideology to the locals, and there were a number of anarchist bombings, including letter bombs sent to individuals.

http://en.wikipedia.org/wiki/1919_United_States_anarchist_bombings
http://en.wikipedia.org/wiki/Wall_Street_bombing

Divergence
I don’t think you’re addressing the issues.

“Market failure: I was thinking of basic scientific research...”

What about it? You seem to think that just saying the words “basic scientific research” provides proof against freedom and in favour of coercion. It doesn’t.

If you’re arguing that there's not enough basic scientific research, you need to show:
• relative *to what*?
• how do you know that whatever else the payees would prefer to spend their money on, would *necessarily* be worse for a) them and their families and preferred community purposes and charities etc, or b) society at large?
• how do you know, how would you prove it?
• ethically, what justifies you threatening to handcuff, or shoot, or imprison someone for disagreeing with your opinion that he should provide the money against his will?

Monopoly
Again you are assuming, not proving your argument.

I have a monopoly of the sale of my own poetry, which sadly proves that monopoly is no guarantee of riches.

The furphies underlying your assumptions are that:
a) monopoly of itself represents a social evil (everyone has a monopoly of his own particular services)
b) if a monopolist withholds products from sale to drive up the price, this would be evil, but if he merely refrained from production, this would be fine – no different than the worker who prefers leisure to work?
c) the purchaser is being forced to pay the monopoly price
d) the purchaser has a right to the fruits of other people’s labour for less than they are willing to accept to pay for them – he doesn’t.

On an unhampered market, cartels are inherently unstable, precisely because of the incentive of others to make profit. What enables them to be permanent, such as the banking and oil cartels, is the intervention of *government*.

Furthermore government is a monopoly of violent force, so even if your assumptions were right, which they’re not, how could substituting the *certainty* of a *present* *violent* monopoly be any improvement on the *mere possibility* of a *future* *non-violent* monopoly?

You keep on conjuring the spectre of starving masses with their noses pressed against the window of the archetypal fat, top-hat wearing, cigar-smoking capitalist. You may not be aware of it, but you are merely channeling Marx and his long-since-disproved “iron law of wages” – (wages under capitalism supposedly tend inexorably to subsistence).

The opposite is true. Marx was wrong. Your *assumption* is bad both in theory and practice. All the great famines of modern times have been caused by government and it is precisely the operation of free trade subject to profit and loss that stops this degradation happening.

“It is easy to find examples of countries where a tiny elite wallows in immense wealth,”
but it’s hard to find examples in which their privileged position is not the result of state interventions, Equatorial Guinea being a case in point.

“The elite can exert their power either through controlling the government…”

…which is no recommendation of government, is it?

“or indirectly, by controlling resources”
More false conjuring of starving masses.

If the control of resources is subject to profit and loss, then the elite can only profit from those resources by using them to satisfy the most urgent wants of the masses, as judged by the masses. Otherwise they will make losses, and the price mechanism will transfer their property peaceably into the hands of owners who *are* willing and able to put those resources to the service of the most urgent needs of the masses, as judged by the masses.

That’s how it should be!

Only if the control of resources is *not* subject to profit and loss, can we get the parasitical privileged elite living at other’s expense, and only government has the power to do that.

As for Gruen’s “distribution” of income, it is entirely illegitimate for purposes of a discussion of voluntary versus involuntary social order to fail to distinguish between income distribution resulting spontaneously from a voluntary order, and forced redistributions of income.

So still no-one has justified government or democracy over non-violent freedom.

thinker 2 and Divergence
You face four categories of conceptual difficulties:

Peter Hume
(1) I dont necessarily agree that Govt in practice represents legalized aggression in isolation.

(2) Gov't is far from perfect Peter, I agree, but I believe that Big Business and Gov't bear equal responsibility for the future of which we appear to be heading.

(3) Gov't often fails Peter because of the undue influence of Business or the rich and powerful and is therefore corrupted; history is proof enough and not just an irrational circular method, even when you are referring to history's serfdoms.

The Gov't should have to some extent have hands on the reigns in order that their theoretical constituents (the people) be represented during decision making processes.
This is not so of business (unless you are considering the body of share holders in corporations as constituents of equivalent value), to the gene pool as a whole.

What is good Gov't?, I don't profess to know Peter, but I hope someone comes up with one in my lifetime, so that the future for most people, the flora, the fauna, the planet etc, can be achieved.

I'm not sure PH that I'm ready to give anarchy a go yet, but I am willing to accept more civil liberty and individual freedom and a much more simplified law structure. I too have some views about how a more voluntary way of life could be, but also how it should be.

I guess you might think me an old control freak PH ?.

p.s. thanks for your links Divergence.